Courtesy: https://www.chittorgarh.com/
Review By Dilip Davda on May, 2026
• The company is primarily engaged in the manufacturing of synthetic textile fabrics.
• On a standalone basis, it posted lackluster financial performance for FY23 and FY24.
• Bumper profits from FY25 onwards raises eyebrows and concern over its sustainability, as it is operating in a highly competitive and fragmented segment.
• Merchant Banker has poor track record.
• Though it looks fully priced based on its FY25 and 8M-FY26 numbers, it appears aggressively priced otherwise.
• There is no harm in skipping this pricey and dicey IPO.
ABOUT COMPANY:
Harikanta Overseas Ltd. (HOL) is engaged in the manufacturing of Synthetic textile fabrics. Its product portfolio includes Ikat fabrics, polyester garment fabrics, saree fabrics, dhupion fabrics, poly linen, and natural fiber. The company primarily caters fabric to women’s wear, producing fabrics for sarees, dress materials, and kurtas, while also offering fabrics for men’s kurtas. Although its fabrics have multiple end uses, the majority of them are utilized in the manufacturing of different types of sarees.
With the objective of supplying products to overseas customers, it has set up a manufacturing unit at Surat, Gujarat. In its early years, the Company marketed its products through merchant exporters. With expertise and increasing international demand, it gradually started focusing into direct exports as well, establishing itself as a player in the textile export market. The Company initially supplied products to Cambodia and the domestic market in Surat.
Over time, its export network expanded to include Bahrain, Singapore, and Thailand, while on the domestic front, the Company extended its presence to other key markets such as Delhi, Bangalore, Karnataka, Maharashtra, Uttar Pradesh, Punjab and Rajasthan. At present, it caters to domestic markets as well as international markets. At times, due to production overload and the need to meet dispatch timelines, the company also engages third-party job workers or procure finished goods from outside agencies. Such purchases are subsequently processed at its facility, where it undertakes finishing, packaging, and quality checks before the products are sold to customers. As of February 28, 2026, it had 111 employees on its payroll.
ISSUE DETAILS/ CAPITAL HISTORY:
The company is coming out with its maiden book building route IPO of 2670000 equity shares of Rs. 10 each to mobilize Rs. 25.63 cr. at the upper cap. The company has announced a price band of Rs. 91 – Rs. 96 per share of Rs. 10 each. The minimum application to be made is for 2400 shares and in multiples of 1200 shares thereon, thereafter. The issue opens for subscription on May 20, 2026 and will close on May 22, 2026. The shares will be listed on BSE SME. The IPO constitute 27.06% of the post-IPO paid-up capital of the company. From the net proceeds of the fresh equity issue, it will utilize Rs. 5.40 cr. for capex on factory premises, Rs. 9.33 cr. for capex on plant and machineries, Rs. 4.75 cr. for working capital, and the rest for general corporate purposes.
The IPO is solely lead managed by Interactive Financial Services Ltd., and Bigshare Services Pvt. Ltd. is the registrar to the issue. Aftertrade Broking Pvt. Ltd., is the market maker, and Beeline Broking Ltd. is a syndicate member. The IPO is underwritten to the tune of 15% by Interactive Financial, and 85% by Erudore Capital Pvt. Ltd.
After issuing initial equity capital at par value, it issued further equity shares at a fixed price of Rs. 100 per share between November 2024 and January 2025. It has also issued bonus shares in the ratio of 6 for 1 in December 2024. The average acquisition cost per share by the promoters is Rs. 7.73 per share. Surprisingly, the pages of the offer document are not numbered. However, as per PDF file page no. 34 the average cost per share shown as Rs. 7.73, and on page no. 69 is shown as Rs. 7.89 per share. The clarification from promoters/merchant banker is needed.
Post-IPO, company’s current paid-up equity capital of Rs. 7.20 cr. will stand enhanced to Rs. 9.87 cr. Based on the upper band of the IPO pricing, the company is looking for a market cap of Rs. 94.71 cr.
FINANCIAL PERFORMANCE:
On the financial performance front, for the two fiscals, the company has (on a standalone basis) posted total income/ net profit, of Rs. 15.06 cr. / Rs. 0.25 cr. (FY23), Rs. 11.27 cr. / Rs. 0.82 cr. (FY24). On a consolidated basis, the company reported total income/net profit of Rs. 35.50 cr./ Rs. 4.47 cr. (FY25), and for 8M-FY26 ended on November 30, 2025, it posted net profit of Rs. 5.09 cr. on a total income of Rs. 26.28 cr. Thus, it has posted erratic financial performances for the reported periods.
For the last three fiscals, the company has reported an average EPS of Rs. 3.84 and an average RoNW of 33.76%. The issue is priced at a P/BV of 3.68 based on its NAV of Rs. 26.08 per share as of November 30, 2025, but its post-IPO NAV data is missing from offer documents.
If we attribute FY26 annualized super earnings to its post-IPO fully diluted paid-up equity capital, then the asking price is at a P/E of 12.42, and based on FY25 earnings, the P/E stands at 21.19. The issue appears aggressively priced despite its recent bumper earnings. Its outperforming margins compared to listed peers is a big surprise and raise concern over its sustainability going forward.
The company has posted PAT Margins of 1.69% (FY23), 7.38% (FY24), 12.70% (FY25), 19.50% (8M-FY26), and RoCE margins of 19.03%, 35.11%, 37.56%, 31.99%, respectively for referred periods. The company has posted unbelievable margins.
DIVIDEND POLICY:
The company has not paid any dividends on the equity shares for the reported periods of the offer document. It will adopt a prudent dividend policy, based on its financial performance and future prospects.
COMPARISON WITH LISTED PEERS:
As per the offer document, the company has shown Betex India, and Swasti Vinayaka Synth., as its listed peers. They are
currently trading at a P/E of 16.0, and 15.8 (as of May 14, 2026). However, they are not truly comparable on an apple-to-apple basis. This comparison appears to be an eyewash.
MERCHANT BANKER’S TRACL RECORD:
This is the 31st mandate from Interactive Financial in the last five fiscals (including the ongoing one). Out of the last 11 listings, 6 opened at discount, 1 at par, and the rest with premium ranging from 1.10% to 15.43% on the date of listing. Thus, the lead manager has a poor track record.
Conclusion / Investment Strategy
HOL is primarily engaged in the manufacturing of synthetic textile fabrics. On a standalone basis, it posted lackluster financial performance for FY23 and FY24. Bumper profits from FY25 onwards raises eyebrows and concern over its sustainability, as it is operating in a highly competitive and fragmented segment. Small paid-up equity capital post-IPO indicates longer gestation period. Merchant Banker has poor track record. Though it looks fully priced based on its FY25 and 8M-FY26 numbers, it appears aggressively priced otherwise. There is no harm in skipping this pricey and dicey IPO.
Review By Dilip Davda on May, 2026
Review Author
DISCLAIMER: No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. My reviews do not cover GMP market and operators game plans. Readers must consult a qualified financial advisor before making any actual investment decisions, based the on information published here. With entry barriers, SEBI wants only well-informed investors to participate in such offers. With crazy listings in the recent past, SME IPOs drew the attention of investors across the board and lead to seer madness. However, as SME issues have entry barriers and continued low preference from the broking community, any reader taking decisions based on any information published here does so entirely at their own risk. The above information is based on information available as of date coupled with market perceptions. The Author has no plans to invest in this offer.
About Dilip Davda
Dilip Davda is veteran journalist associated with stock market since 1978. He is contributing to print and electronic media on stock markets/insurance/finance since 1985.
Dilip Davda is a leading reviewer of public issues and NCDs in the primary stock market in India. The knowledge he gained over 3 decades while working in the stock market and a strong relationship with popular lead managers makes his reviews unique. His detailed fundamental and financial analysis of companies coming up with IPOs helps investors in the primary stock market. Dilip Davda has a special interest in analyzing the SME companies and writing reviews about their public issues. His reviews are regularly published online and in news papers.
(Dilip Davda -SEBI registered Research Analyst-Mumbai,
Registration no. INH000003127 (Perpetual)
Email id: dilip_davda@rediffmail.com ).
Courtesy: https://www.chittorgarh.com/
